Technology | Media | Telecommunications

Friday, August 10, 2012

How Mobile Phones are Used in Emerging Nations

The overall global mobile phone market grew by just 1 percent year-over-year in the second quarter of 2012 (2Q12), as Samsung and Apple shipped almost half of the world's smartphones.

According to the latest market study International Data Corporation (IDC), mobile device vendors shipped 406.0 million units in 2Q12 compared to 401.8 million units in the second quarter of 2011.

So, what happened that caused the slowdown in growth rate? It's complicated.

Samsung and Apple have more than doubled their combined market share over the past two years, which has created more distance between the companies and the competition.

"Samsung and Apple have quickly become the global smartphone heavyweights though both employ somewhat different approaches to the market," said Kevin Restivo, senior research analyst at IDC.

According to IDC's assessment, Samsung employs a broad-based strategy wherein many phone types are created that cover a wide range of global market segments. Apple, in contrast, offers a small number of high-profile smartphone models that target the wealthy consumers in a few nations.

While both companies have expanded their geographic presence in pursuit of new market share, the two companies will inevitably come into greater conflict as both try to generate additional market penetration.

Market share gains will be harder to generate, however, if the worldwide smartphone market grows at rates similar to the 42.1 percent year-over-year rate at which the market increased in 2Q12.

This was the lowest growth rate since the fourth quarter of 2009. Vendors shipped 153.9 million smartphones in 2Q12 compared to 108.3 million units in 2Q11. The 42.1 percent year-over-year growth was one percentage point lower than IDC's forecast of 43.1 percent for the quarter.

Clearly, Apple may soon discover that it has saturated the addressable market for its high-end devices. With the exception of the upside potential for used older model iPhones in developing nations, their future growth potential could be very limited.

Moreover, the prospect of further global economic woes puts growth prospects for the mobile phone market at risk -- perhaps with the exception of the emerging nations within Africa, where mobile phone use helps to drive the local economy.

"With half of 2012 behind us, vendors are looking ahead to 2013 and how key markets -- particularly Europe and emerging markets -- will play out," said Ramon Llamas, senior research analyst at IDC.

Despite recent maneuvers to shore up several countries within the Eurozone, the effectiveness of these efforts remains to be seen. Meanwhile, emerging markets will continue to be strong contributors -- due to their sheer size and growth trajectory.

But can they offset potential declines in other countries?

IDC expects long-term mobile phone and low-end smartphone shipment demand to grow steadily in 2012 and through the years ahead -- due to the central role mobile phones will continue to play in people's lives.

For the many nations in the world with a large population of poor citizens, access to a mobile phone has become the essential tool to break free from a life of poverty.

A mobile phone can be a source of many things -- such as insight about commodity prices, useful information, practical skills education, reliable news and basic communication with the outside world.

In nations where corruption and tyranny are sustained by oppression of the people and fear of the unknown, a mobile phone can become a catalyst for meaningful change.